Finkel & Fernandez, LLP

One of the most common reasons clients seek the advice of an elder law attorney is for guidance in protecting their assets in the event long term care is needed, either immediate or at some time in the future. Under the Deficit Reduction Act, there are now stricter penalties imposed by Medicaid and SSI for the transfer of assets if long term nursing home care is needed. Under the long term care nursing home transfer of resources and income rules, the Medicaid office will look at all transfers made up to five years back and will penalize you for transfers made during this period of time beginning on the date you apply for long term care benefits [nursing home], going forward. These transfer penalty rules apply to non exempt transfers only. As of this writing, there is no penalty period for the transfer of assets when applying for community (home-care) Medicaid, some adult day-care programs, prescription-drug coverage, medical care, and other Medicaid benefits and programs. However, caution must be taken before transferring assets and applying for any of these benefits, in case future nursing home care will be needed. Your elder law attorney can assist you in establishing a proper plan for your needs.

An exempt transfer of your home may be made to qualifying individuals without a penalty. Transfers of assets to one’s spouse, or to other specific qualifying individuals, may likewise be made without a penalty. Where future long term nursing home services are anticipated, common trusts being utilized for income and or asset protection include the “Irrevocable Trust”, “Medicaid Income Only Trust”, and or “Supplemental Needs Trust”. Where community services are needed for a disabled individual, the “Pooled Income Trust” should also be considered. Strategies including the use of annuities, gifts, loans, promissory notes and long term care insurance should be discussed with a knowledgeable elder law attorney.

Depending on the terms of the trust, the assets placed in an irrevocable trust may or may not be considered available for Medicaid and public benefits purposes. Irrevocable trusts, where the donor retains the right to income only, also known as a “Medicaid Income Only Trust”, is a popular tool for Medicaid planning. Funds placed in a properly drafted Supplemental Needs Trust will not disqualify disabled beneficiaries for most governmental benefits. Disabled individuals over the age of 65 who wish to remain at home and are in need of Medicaid benefits, but need an income stream above the Medicaid income allowance, may be able to shelter their excess income in a properly established Pooled Income Trust, an invaluable and underutilized tool to help seniors remain in the community. Your elder care attorney will review your circumstances and help you decide upon what planning options are available based upon the particular financial circumstances to qualify you or your loved one for future or immediate long term care. .

It is crucial that you do not transfer any of your assets before consulting an elder law attorney who is well versed in the fields of long term care, benefits and entitlements, preservation and transfer of assets, Medicaid, Medicare, disability planning and asset protection. The Deficit Reduction Act of 2005 imposed harsh penalties for transfers and extreme caution must be taken before any transfers are made.

In order to plan for your future or if you have any questions contact Fern J. Finkel or Julie Stoil Fernandez at Finkel & Fernandez, LLP
16 Court Street, Suite 1007, Brooklyn, New York 11241, 347-296-8200 (telephone), 718-965-3185 (fax), ffinkel@ffelderlaw.com, jstoilfernandez@ffelderlaw.com.